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Creating a working environment that promotes diversity, equity, and inclusion (DEI) is a relatively recent priority for many organizations. Google Trends search interest in the term spiked in May 2020, and although the term’s popularity has waned slightly since that peak, it’s still a top concern for many companies who want to attract the best talent.
While it’s easy to talk about DEI as something your company values, it’s much more difficult to create business strategies and programs that actually support the needs of a diverse population in an inclusive and equitable way. One method that some employers can use to help support DEI efforts is to implement a workplace emergency savings account (ESA) program for all their employees.
Financial inequality is a fact of life in the United States. Besides offering fair wages and recruiting new employees using outlets and job descriptions that resonate with them, there’s a lot that employers can do to help rectify some of the disparities that exist between races, genders, and people with and without disabilities.
A Pew Research Center study found that fewer than half of Black adults had an emergency fund, and that 15% of Black respondents were working multiple jobs in the past year. Almost three-quarters of the survey-takers who were working multiple jobs said the combined income was either essential (45%) or helped them meet basic needs (28%). And a BlackRock study found that 54% of Black and 45% of Latinx young adults would not be able to cover a $400 emergency expense without borrowing money or selling something.
Bankrate found that women are more likely than men to carry credit card debt and that they are saving less for emergencies than men. Women also lag behind men when it comes to saving for retirement: 62% of women in the workforce were behind on retirement savings compared to 48% of men.
People with disabilities are another vulnerable group when it comes to savings challenges. The Consumer Financial Protection Bureau found that more than 60% of people with disabilities between the ages of 25 and 64 had no savings for unexpected expenses.
The lack of emergency savings has a wider impact on these groups. Without an account to tap in case of an unexpected urgent expense, these groups tend to save less in their retirement funds, carry more high-interest debt, and find it very difficult to achieve financial stability, or to meet any big financial goals they might have set.
A workplace ESA can help employees find that stability by providing them with an easily accessible, cash resource that can help them meet any surprise expenses without having to pull from a long-term savings account. Those long-term accounts can in turn accrue more value, providing a larger source of wealth for these groups upon retirement.
Your employee’s financial wellbeing will affect their stress levels, and those stress levels have an enormous impact on your company’s bottom line. In 2004, Harvard Business Review used the term “presenteeism” to describe the phenomenon of workers being physically present at their jobs while their minds are elsewhere.
That was nearly 20 years ago, and back then, HBR estimated that presenteeism collectively costs employers $150 billion every year. Imagine how high the cost is today!
By offering a workplace ESA as part of the benefits package, employers can help reduce presenteeism in their own business because it removes at least some stress from the lives of employees. Having access to a liquid savings account that can be tapped for car repairs or other unexpected expenses can make a huge difference to a worker’s peace-of-mind and ability to focus on the job.
PricewaterhouseCooper reports that financially stressed employees are less engaged at work, less likely to feel like they belong, less energized at work, less likely to recommend their company as a good place to work, and less proud to work where they are currently employed. The biggest thing employers can do to help is to “implement financial wellness benefits that focus on the immediate money management concerns employees are facing,” according to the PwC report.
The lack of generational wealth and other resources has a direct effect on the level of education that employees are able to reach. Almost 70% of the men who earned doctoral degrees (68.4%) in 2018 and 2019 were white, and nearly two-thirds of women who earned doctoral degrees (63.6%) were white.
It’s not a reach to say that there is a direct correlation between the ability to save for an emergency and the ability to get an education, especially at a graduate level. Emergency savings also make it more possible to seamlessly weather career changes or even to start a business — because savings accounts intended to help savers reach those goals won’t be touched because an emergency arose.
Beyond that, providing a workplace ESA can give employees more financial breathing room to take risks that will help them feel more happy and fulfilled in all areas of their lives and pursue opportunities they might not otherwise be able to. It’s a way to contribute to a diverse, equitable, and inclusive workforce, especially if employers are able to make a workplace ESA benefit widely available to both part-time and full-time employees.
It’s clear that workers and employers can gain a lot through a workplace ESA. But how do you set one up, and who can help provide such services?
SecureSave is one of the best-known workplace ESA platforms and offers workplace ESAs to thousands of employees at a range of companies and locations. The SecureSave platform provides an immediately accessible emergency account that works just like liquid cash and can be set up with a true minimum of effort on everyone’s behalf — and a SecureSave ESA can be provided to any employee, not just those eligible for a long-term retirement plan through work.
Companies such as OfColor are working with employers to help offset the wealth and resource gap between employees of color and white employees by providing education and tools to help them better manage their financial health. Providing education and support around finances can be beneficial to every worker, but it’s especially important to minority employees and can help showcase a company’s commitment to DEI.
BlackRock’s Emergency Savings Initiative helped reach more than 10 million people between 2019 and 2022, giving them the opportunity to save more than $2 billion. The partnership with Common Cents Lab, Commonwealth, and the Financial Health Network researched initiative options that would have the greatest impact and determined that offering workplace emergency savings accounts would be the best way to help Americans living on low to moderate incomes.
A key part of inequality is financial or wealth inequality. Minority groups often do not have the opportunity to create a cushion to protect them against unexpected expenses, and basic needs eat up more of their paychecks, making it very difficult (if not impossible) to start saving for an emergency even if it’s a goal.
By providing access to a workplace ESA and offering incentives and bonuses for signing up, employees can offer a helping hand in creating that cushion. This can have a ripple effect in their employee’s finances, giving them the chance to save for long-term goals without disturbing those accounts with emergency withdrawals, and improving their quality of life — potentially for generations to come.